Non-disclosure at Silicon Valley Bank?
We don’t typically write on Fridays because we’re so focused on the #fridaynightdump. But today’s decision by the FDIC to put Silicon Valley Bank (SIVB) into receivership really couldn’t wait until next week.
That’s because it’s a critical lesson in what happens when a company fails to disclose something pretty important. I’m riffing a bit on this piece that Mike “Non GAAP” Puangmalai put out this morning on the departure of Chief Risk Officer Laura Izurieta last year. As Mike notes in his piece, the company did not disclose this departure until it filed its preliminary proxy last Friday. There on page 5, the filing notes that Izurieta stopped serving as Chief Risk Officer on April 28, 2022 and left the bank entirely in October 2022. The filing went on to say that Kim Olson, a former Chief Risk Officer, Americas for Sumitomo Mitsui Banking Corporation, joined the company as Chief Risk Officer on Dec. 27. 2022.
Now here’s where it gets pretty interesting: Izurieta was a “named executive officer” of the bank, which means that her departure as Chief Risk Officer should have triggered an 8-K. According to prior proxies, Izurieta had been a named executive since joining the bank in Aug. 2016. The SEC’s rules are pretty clear on this:
So why didn’t the bank file an 8-K when the Chief Risk Officer left and again when a new Chief Risk Officer (Olson) joined? We’re sure someone involved in securities litigation is looking into that question as I type this out. It’s also interesting to note that the bank probably realized relatively recently that it had never disclosed this change. How else to explain the sudden appearance of a preliminary proxy this year? The last time the bank filed a PRE 14A was in 2019!